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interconnectedness
of environmental influences causes complexity. Importing and 
exporting companies are sensitive to exchange rates, which themselves are sensitive to 
interest rates. Interest rates then influence a company's borrowing costs. Scenario-building 
and modelling are ways of dealing with complexities to develop an understanding of 
environmental conditions. 
 EXAM FOCUS POINT 
PEST analysis is a useful tool to employ as an initial survey of conditions and options. 
BPP Tutor Toolkit Copy

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CHAPTER 2
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THE BUSINESS ENVIRONMENT 
 
23 
(b) 
Stability/dynamism
(i) 
An area of the environment is stable if it remains the same. (For example, investors get 
nervous about a change in government.) Firms which can predict demand face a stable 
environment. 
(ii) 
An unstable environment changes often. The environment of many fashion goods is 
unstable. 
As a rule of thumb, use the following checklist for uncertainty. 

Simple
(few environmental influences to worry about) 
and stable:
low uncertainty 

Complex and stable
: low to moderate uncertainty 

Simple and unstable
: moderate to high uncertainty 

Complex and unstable
: high uncertainty 
1.1 The changing environment 
Changes in the business environment have been driven by a number of developments. Here are some of 
the changes that have happened. 
(a) 
Globalisation
of business – increased competition and global customers as domestic markets 
become saturated, with companies able to compete easily anywhere in the world 
(b) 
Science and technology
developments, especially in communications (the internet) and transport 
(particularly air travel) 
(c) 
Mergers, acquisitions and strategic